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What will this account be worth when you retire

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Problem: You just opened a retirement account with a $5,000 deposit. Assuming that you can earn an 8% annual return (and that you make no additional deposits):

Required:

Question 1: What will this account be worth when you retire in 35 years?

Question 2: Now, assume that you wait 15 years before making the initial (and only) $5,000 deposit to your retirement account. What will your account be worth when you retire (note, you are still retiring 35 years from today)?

Question 3: Why is the difference between your answers to A. and B. so large, and does this example suggest an optimal retirement strategy?

Reference no: EM132433895

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